Almost 20 years ago already, local advertising powerhouse Fallon McElligott produced a campaign for Rolling Stone magazine. It was powerful but simple, like much of their work at the time. It showed two images side by side – one made you think of 60s counter culture, the other was current and not counter culture-ish at all.

 

Under the first image was the word perception; under the second, reality. Think of a tie-dyed shirt next to a starched button-down. Rolling Stone and their readers had grown up over the years, and two guys at Fallon conceived hundreds of different pairings to convince advertisers to spend their money there again.

 

Perception isn’t always reality. Fallon & Rolling Stone did a nice job of illustrating that simple fact.

 

When it comes to the value of your home, or your neighbor’s condo, a new study shows that perception and reality aren’t always aligned.

 

From an MPR story yesterday: “The U.S. Census Bureau has released numbers on median home values for 2007. The statistics are part of the American Community Survey, an annual checkup that seeks to present how Americans are living. Usually, census numbers focus on demographic figures and the ethnic makeup of our population. But census researcher also get what are called soft numbers, by asking people what they think about some factors.”

 

In 2006, the survey showed the median home price in Minneapolis to be about $230,000. Actual sales data showed the homeowner survey to be $7,000 too high. Apparently Minneapolis residents like to read the paper, because amid all the doom & gloom a year later, the 2007 survey numbers showed the median price to be $20,000 less than actual data.

 

Real estate agents fight a daily battle over value. The majority of sellers really want their home to be worth more than the market is paying currently. Most want to have a great story to tell about how much money they made when they sold. Me too.

 

Before driving to meet a potential seller after work, real estate professionals like to get prepared. We look at the market: we compare sale prices of similar homes, we compare prices of homes currently on the market, we compare prices of pending sales, and we compare prices of homes that have been rejected by the market. We look at a lot of data to establish a price range where a reasonable (objective) person would expect a home to sell.

 

A list price is always the homeowner’s choice – the sale price, however, will be limited to what buyer is willing to pay. It can be a difficult conversation when we compare actual data, reality - to a strong belief, perception.

 

 “I just KNOW it’s worth $245,000,” a homeowner once told me after I presented overwhelming data showing nothing like it sold for more than $210,000 in the previous 12 months. (They insisted on over-pricing the home, and it didn’t garner any offers.)

 

If you plan to sell, please consider the data provided by a Realtor. Interview more than one. Good agents are selling homes now, have a feel for the market, and can help with the difference between perception and reality.